The present invention relates generally to methods and systems for facilitating investments. More specifically, the present invention relates to a method and system for facilitating investments over a computer network using a computer-based system for creating, managing, and trading user specifiable portfolios of investments.
The above-mentioned related applications disclose, inter alia, embodiments of systems, methods, and apparatuses for enabling investors, both large and small, to create, manage, and trade portfolios of investments. In certain embodiments, each investor is provided the ability to select and purchase various investment vehicles as part of their portfolio. Among other things, investors are provided the ability to select portfolios of securities based on their risk/reward characteristics relative to the market, their desire to invest in particular types of investments, and other criteria. This provides an easy way for even relatively novice investors to select diversified portfolios of securities or other investments.
However, portfolio investing is based on the concept that one selects target weights for each investment and then invests an amount of money consistent with the target weights. Once selected, the actual weights vary from the target weights due to gains and losses of the various investments. However, rebalancing without care can cause taxable events, even for small amounts of money, which could overwhelm an individual investor in terms of tax preparation and related accounting.
The present invention is therefore directed to the problem of rebalancing one's investments using a portfolio investment system while controlling inadvertent taxable events.